input output and outcome 1 3 · daio paper established disposable baby diaper production and sales...

Output and Outcome

Daio Paper Group’s Business ModelThe Daio Paper Group, as a full-range paper manufacturer engaged in the manufacture and sale of paper and

paperboard as well as home and personal care (H&PC) products, seeks to flexibly respond to changes in societal

needs in the wide-ranging fields in which it operates. We conduct research and development and commercialize

products that contribute to cultural and industrial development and the improvement of the quality of life.

Input

Problem Solving Capabilities

Human Resource Capabilities

Cost Competitiveness

Brand Power

Market-Driven Business Strategy

Product Value Chain

Afforestation

Flexible production

systems

Recovery of used paper

Procurement of raw materials

Environmentally Conscious Company

Customer-centric approach to

identifying issues

Dialogues to understand

customers’ issues

The Daio Paper Group operates businesses in a wide range of fields extending from materials such as newsprint, printing and publication paper, containerboard, and wrapping paper that serve as the foundation for cultural and industrial activities, to personal care products such as facial tissue, toilet tissue, and baby diapers, supporting the day-to-day lives of everyone from babies to the elderly. The Group does this by leveraging its core competencies originating from its competitive advantages.

Marketing & sales

⃝�Full-range paper manufacturer that operates the Paper and Paperboard Business and the H&PC Business

⃝�Elleair brand assets and brand-building capabilities

Brand Power

⃝ Sharing of advanced technologies and expertise within the Group

⃝ High productivity in the procurement of materials, in production, and in sales

⃝ Intellectual property upheld by large numbers of patent applications filed and patents in force

Cost Competitiveness

⃝��Diverse human resources underpinning sustainable corporate growth

⃝��Functional organizations for procurement of raw materials, production, and sales

⃝Diversity management

Human Resource Capabilities

⃝ Business development toward the realization of a sustainable society⃝ Co-existence with all stakeholders

Problem Solving Capabilities

☞ See p.15 for details



Competitive Advantage1 Competitive

Advantage3

Competitive Advantage2

14Integrated Report 2019

About the Daio Paper Group

Daio Paper Group’s Value Creation

Daio Paper Group’s Value Creation Strategy

Value Creation Promotion Structure

Initiatives for Sustainable Value Creation

Financial Data / Corporate Information

13 Integrated Report 2019

Daio Paper established disposable baby diaper production and sales companies in Thailand, China, and Indonesia.

Daio Paper incorporated their household paper products, such as toilet tissue for bidet toilets and the Cotton Feel brand, and fine papers into its product lineup and now offers those high-value-added products nationwide.

Acquired the Attento brand disposable adult diaper business from P&G

Established business foundationDaio Paper was established in 1943 through the merger of Shikoku Paper Corporation and 13 other paper companies for the purpose of manufacturing and selling washi (traditional Japanese paper).

2011Thailand

(Rayong Province)

2012China (Nantong City)

2014 Indonesia (Cikarang)

Made progress in the development of applications of cellulose nanofiber (CNF)

Started operation of a new household paper machine at Kawanoe Mill

Acquired Miura Printing Corporation

Developed as a newsprint and containerboard manufacturer

1943

Making a leap forward as a full-range paper manufacturerDaio Paper completed its foundation as a full-range paper manufacturer in 1979 when it entered the household paper market with the Elleair brand and concurrently increased capacity to improve productivity and ensure a stable supply of a wide variety of papers, such as printing and publication paper and communication paper, in addition to its mainstay newsprint and paperboard products.

1979

Acquired Nagoya Pulp (now Kani Mill)

1983

2011

2007

2019

2018

2017

Global development and multi-category business expansion through local production for local consumption

Started operation of the integrated coated paper production facility (N10 machine) at Mishima Mill

2007

N10 paper machine (on-machine coater)

2017 Acquired the paper products business of Nisshinbo Holdings Inc.


Established Forestal Anchile LTDA.

1989


Established Iwaki Daio Paper Corporation

1996



N2 paper machine at the New Mishima Mill

1973 Built the New Mishima MillStarted operation of the N3 wide trim width newsprint machine and the N1 and N2 linerboard machines

N3 paper machine at Iwaki Daio Paper

2014Installed an additional containerboard machine at Iwaki Daio Paper Corporation(Rebuilt and relocated a paper machine from Kani Mill)

Source of Competitiveness

Mishima Mill accounts for approx. 8% of total paper and paperboard production in JapanThe Mishima Mill, the Daio Paper Group’s core paper mill, engages in fully integrated production ranging from pulp to paper and paperboard. Its annual production is approx. 2.1 million tons, or some 8% of Japan’s total paper and paperboard production. By combining all types of pulp with a variety of paper machines, Mishima Mill has developed a flexible production and sales structure aligned with market needs.

Competitive Advantage 1 Product Value Chain

Development of a flexible production structure capable of meeting the diverse needs of consumers as a full-range paper manufacturer

Daio Paper Through the Years

15 16Integrated Report 2019 Integrated Report 2019







Shift to high-value-added products through M&A

New value creation from wood resources ☞ See p.27 for details

2016 Started operation of a cellulose nanofiber (CNF) pilot plant

2017 Developed and offered a range of CNFs in slurry, dry powder, and molded sheet

2019 Developed a high-performance table tennis racket using CNF as a component, used CNF as body panels of an electric car

2017 Acquired the paper products business of Nisshinbo Holdings

Acquired Miura Printing Corporation

Paper and Paperboard Business Home and Personal Care (H&PC) BusinessTo adapt flexibly to changes in market trends, Daio Paper leverages the strength of its Mishima Mill (Ehime Prefecture), one of the largest coastal paper mills in the world capable of producing a wide range of pulps, paper, and paperboard products, to promote a shift of production and sales mix in its Paper and Paperboard Business. Through the integrated operations of the Group’s companies with Mishima Mill at the core, we share technologies and information on improving productivity and reducing energy costs and work to provide high-value-added products and reduce environmental impact.

Daio Paper has leveraged newsprint and containerboard papermaking technology to enter the household paper market, and thereafter leveraged B2C marketing expertise gained from selling household paper to enter the market for disposable diapers, feminine care products, wet wipes, and other related products. As a result, now it pursues a unique market-driven business strategy as a manufacturer with a portfolio of both household paper and absorbent products.

N3 paper machine at Iwaki Daio Paper

Paper knives Paper trays

Examples of applications of EliPla Paper high-density heavyweight paper

Miura Printing CorporationDevelopment of a molded sheet with high CNF content

Maximization of production at Mishima Mill and shift from graphic paper to packaging paper

Acquired a dominant market share in the household paper category

Brand strategy and a shift to high-value-added products through M&A

Decarbonization and plastic-free initiatives

Securing a stable supply structure through increase in production capacity

Full-scale entry into overseas marketsMulti-category business expansion with disposable baby diapers, household paper products, and other products

KN1 household paper machine at Kawanoe Mill

Elleair Zeitaku Hoshitsu lotion tissue

i:na double length toilet tissue

Yoru Ichimai Anshin overnight incontinence pads

Shitagi Soukai+ underwear-type adult diapers

Cotton 100% incontinence pads

Angel (‘Tianshi’) super premium baby diaper

Light Plume (‘Guangyu’) ultra premium baby diaper

Competitive Advantage 2 Market-Driven Business Strategy


2007 Started operation of the integrated coated paper production facility (N10 machine) at Mishima Mill

2014 Relocated the N3 paper machine from Kani Mill to Iwaki Daio Paper and rebuilt it as a containerboard machine

2019 Repurposed the N7 paper machine at Mishima Mill as a containerboard machine

2017 Built large-scale warehouses on sites adjacent to main domestic mills

Replaced three woodchip carriers with eco-ships

2019 Launched EliPla (eliminate plastic) Paper, a high-density heavyweight paper alternative to plastic


2020 Plan to start operation of a biomass boiler at Mishima Mill under the FIT scheme

2011 Launched Elleair Zeitaku Hoshitsu lotion tissue

2013 Launched Shoshuu+ deodorizing toilet tissue

2018 Captured the No. 1 market share in paper category (facial tissue, toilet tissue, kitchen paper)

Tapping a new market: Launched i:na double length toilet tissue

2007 Acquired the Attento brand disposable adult diaper business

2017 Acquired the paper products business of Nisshinbo Holdings

2011 Established Elleair International Thailand Co, Ltd. (EIT) in Thailand (Rayong Province)

2012 Established Elleair International China (Nantong) Co., Ltd. (EICN) in China (Nantong City)

2014 Established PT. Elleair International Manufacturing Indonesia (EIMI) in Indonesia (Cikarang)

2017 Opened a representative office in Turkey

Launched Light Plume (‘Guangyu’) baby diapers for the ultra premium segment in China

2018 Opened a representative office in Russia

2016 Started operation of the N8 household paper machine at Kani Mill

2018 Started operation of the KN1 household paper machine at Kawanoe Mill

2021 Planned start of operation of the KN2 paper machine at Kawanoe Mill








Revised the Daio Global Environmental Charter

20181998 2018

2020

2020

2017Iwaki Daio Paper Corporation received the “Nikkei Superior Trend-Setting Factories and Offices Award”First in the industry to begin manufacture and sale of newsprint made from 100% recovered paperIncrease of the biomass power generation ratio from 70% to 100% (planned)

Improved logistics efficiency by consolidation into large-scale logistics centers

Planned start of an electricity sales business utilizing the FIT scheme*FIT scheme: Scheme under which electric utilities purchase renewable energy at a fixed price

Planned installation of a biomass fuel production facility that uses papermaking wastewater at Mishima Mill

Switched to eco-ships

Elleair Logistics Center Fuji-NanryoPRINCESS HARU (launched in July 2017)

About Iwaki Daio Paper

High utilization rate of recovered paper and in-house power generation with biomass boilers Iwaki Daio Paper began operation in 1997 as a paper mill with the concept of making maximum use of recovered paper from the Tokyo metropolitan area. In 1998, the company became the first in the industry to begin manufacturing and selling newsprint made from 100% recovered paper and it received the Nikkei Superior Trend-Setting Factories and Offices Award from Nikkei Inc.

Today, Iwaki Daio Paper produces containerboard made from 100% recovered paper in addition to newsprint and uses approximately 50,000 tons of recovered paper monthly. The company also promotes the use of hard-to-recycle recovered paper, such as paper cores. In addition to using biomass as a papermaking raw material, it also plans to increase the ratio of biomass energy used at the mill from the current level of approximately 70% to 100%.

The Mishima Mill has engaged in biomass power generation using black liquor generated in the pulp making process.In this new project, the facility recovers methane gas from methane-containing kraft pulping wastewater and effectively uses it as an alternative to heavy fuel oil. This is expected to result in the following benefits: 1) environmental load reduction such as reduction of CO2 emissions and effluent load and 2) the reduction of manufacturing costs. This project was selected as a leading project on the utilization of renewable energy by the Ministry of Economy, Trade and Industry under its FY2018 subsidy program to support private enterprises installing facilities to utilize renewable and thermal energy.

Recycling of recovered paper

Recycling of fuel Recycling of waste materials

Promotion of the use of recovered paper use has emerged as an important theme in the context of the papermaking industry’s efforts to help address social issues such as the need to conserve resources and reduce the volume of trash.

We have led the way in the papermaking industry in introducing biomass boilers at in-house power

generation plants that supply electric power used in the mill and are seeking to reuse all kinds of waste in pursuit of efficient thermal recycling.

We process and recycle vinyl and other waste and fine fibers discharged in papermaking processes and use them mainly as fuel for power generation.

Supply of electricity and steam

Use as fuel for power generation

Waste generated in papermaking processes

Facility to Produce Biomass Fuel Using Papermaking WastewaterHokkaido 4.6%

Shizuoka 2.9%Chubu 9.5%

Hokuriku 2.2%Kinki 16.7%

Chugoku 4.8%

Shikoku 2.7%Kyushu 7.0%

Iwaki Daio Paper Corporation

Kanto 43.6%Tohoku 6.0%

The Daio Paper Group’s Recovered Paper Purchasing Ratio by Region

Source of Competitiveness

Sustainable forest managementIn 1989, Daio Paper established a forestry company, Forestal Anchile LTDA. in Chile, South America. The company owns 59,000 hectares of forest, approximately the same area as Tokyo’s 23 wards. We have preserved 28,000 hectares, about half of the landholding, as native forest and are working on the conservation of biodiversity.

Further evolution into an environmentally conscious company to contribute to the realization of a sustainable, recycling-oriented society

Continuous kraft pulp digester

Vacuum evaporator for black liquor

After installation

Malodorous wastewater

Heavy oil

Treated wastewater

Existing wastewater treatment facility

Biomass fuel production system (anaerobic treatment facility)

Effluent release

Lime-reburning kiln

Biogas (annual production of 5,000kL in heavy oil equivalent)

Competitive Advantage 3 Environmentally Conscious Company









input output and outcome 1 3 · daio paper established disposable baby diaper production and sales...

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